Are you affected by the M2E3 Pipeline project or the AMP Pipeline project? In this video, Landowner Condemnation Rights Attorney Philip Hundl describes both projects. He also talks about the rights that landowners have in dealing with right of way agents, pipeline companies, and the condemnation process. If you’d like an appointment with Mr. Hundl, please call our office at 800-266-4870 or click this link for a no-obligation case evaluation.
Summary of the M2E3 Pipeline and AMP Pipeline Projects from the Columbus Landowners’ Forum
– Welcome, everyone. My name’s Philip Hundl. I think I’ve met everyone already this morning. So I appreciate you all being here. We have these Landowner Forums or Pipeline meetings or Condemnation meetings just to inform everyone of different pipeline projects that are happening. We’ll also talk about your rights in the condemnation process.
Areas of Condemnation
We’ve all heard about the pipeline projects. Of course, there are other areas of condemnation, other projects that private entities or governmental agencies or the government can use in eminent domain to condemn your land. It could be highway construction under TxDot, or power lines from LCRA or the electric coops. I’ve had quite a few of these miscellaneous projects — water lines, sewer lines and even canals for LCRA.
Interesting comment recently from LCRA is we were talking about LCRA canal specifications. And I said, well what are your specifications when you build a canal? And they said, well we really don’t build canals, we just take canals. So you know farmers that build canals, they potentially are targets for LCRA condemning them and taking them. So, that was a little something different that most people aren’t aware of.
Permanent Easements and Temporary Easements
So, we’re here about pipelines. You all are being faced with or will be faced with a potential pipeline project. Those easements can run from anywhere from 30 foot to 50 foot or even sometimes 60 foot, the permanent easements. Then there are always some ancillary associated temporary easements or temporary workspaces. Other things that can be taken by the pipeline companies are valve sites and sometimes that’s a fee simple taking or an easement and we can talk about that.
Also with these pipelines we also sometimes are faced with the associated power lines and facilities for pump stations or compressor stations for pipelines. A lot of times, it’s just the permanent easement with a temporary easement, but this can also be an issue, too.
Increase in Texas Pipeline Projects
We’ve seen a huge increase in pipeline projects really beginning two years ago. I recently went to a conference and they were talking about all the way through 2022. This can always change with the demand or supply, but right now the supply in the Permian Basin is out of sight and they’re having to flare a lot of gas. I think that last I heard there are 4,000 wells that they’re having to flare the gas off of. And so they’re trying to send the gas to market and that’s what a lot of these projects are about.
Some of the big names that you have heard of or seen. Kinder Morgan is in the news a lot, of course, because of the Permian Highway Pipeline that’s running through the Hill Country. Most of these pipelines take a typical route. They’re coming out of the Permian Basin running to the Gulf Coast out of Corpus or Houston and they take a route that’s either south of San Antonio or north of Austin.
And Kinder Morgan, you know why are they in the news so much? It’s because they’ve decided to take a path in between San Antonio and Austin just south of San Marcos. What does that run through? The Hill Country, So they’re running through Hays County, Blanco County, Gillespie County, and Fredericksburg. That’s made the news.
About the M2E3 Pipeline Project
All right, the M2E3 pipeline — it runs from Midland to Echo, Texas. Echo’s just south of Houston, I just call it Houston. It’s their third line. There’s an M2E2 and there’s an M2E1, but those are already in the ground, so this is the M2E3 pipeline.
I just put this up. This is available to anyone. You can find it on the Railroad Commission website. But it’s their approved permit for about 500 miles of pipeline, 36 inches in diameter, transporting crude oil. It was approved May 16, 2019. It was filed in early May, so the Railroad Commission turnaround is very quick on an application and the approval of the application.
I’ve seen applications rejected for some technicality and then they’re approved quickly. That’s been a big debate with the Kinder Morgan Permian Highway Pipeline — is the Railroad Commission’s evaluation and review process comprehensive enough or not? The courts have said it’s good enough.
Unfortunately, the law in Texas seems to defer a lot to the oil and gas industry. No surprise, in Texas we the public, tend to like oil and gas and want to do what we can for oil and gas. That’s the sentiment of the courts and the politicians.
The M2E3 Pipeline Operator is Enterprise. It’s also the Economic Operator because this is what needs to be designated in a Railroad Commission filings. The Pipeline Owner is M2E3. What’s M2E3? Essentially, that’s the subsidiary or affiliate of Enterprise. So you may hear me say Enterprise and it’s M2E3.
I’d say half of you in here are affected by the M2E3 pipeline and the other half AMP or Aspen Midstream pipeline and we’ll talk about that in a minute.
This is a route way out in Midland is where it starts and then it ends up just south of Houston.
Next, counties, the M2E3 pipeline affects a lot of counties, of course, it’s 500 miles. So these are the counties. The counties that my firm is handling are really from Burnet all the way to Brazoria County. So actually to Fort Bend, it misses Brazoria. So that’s the area we’re covering. Do I handle some cases out in Midland and Reeves County? I do, but on this particular line I don’t have any yet.
This is intended to focus on the areas that you all are from and what we’re handling. So Burnet all the way to the north and then down here. And actually a part of it does go into Brazoria County and then Fort Bend so and all points in between.
So, next. I put this up because I use it from time to time. If you’re ever wondering am I affected by this pipeline, particularly from Enterprise? And I haven’t seen other companies do this yet. Enterprise on their website has a pipeline viewer tool and you can plug in your address and see if you’re affected by one of their projects. So very helpful, I wish all the other pipelines had the same thing.
I oftentimes get contacts from concerned landowners saying you know I’ve been contacted by a right of way agent, but I don’t know if my land is affected. And a lot of times as we’ve seen with the AMP projects, your property may be affected. At first you get called and you’re asked to have your land surveyed and then you never get called back again and you wonder what’s going on. And so in those situations, the pipeline has probably rerouted around your property and you’re not going to be affected.
I will say this right now and we’ll talk about what stage each of these projects is in, especially M2E3 pipeline. They’re at the stage of sending out final offers and they’re starting to file condemnation suits. So, you know, if you think you’re maybe affected by the M2E3 pipeline but you haven’t heard anything for awhile, then my guess is that you’re no longer affected by the M2E3 pipeline.
Aspen Midstream — you know this one’s going to be a little bit more of a general, broad discussion because AMP has a lot going on in Washington, Fayette and Austin counties. So this is from their website, it’ll have a little map. I’m going to say it’s an old map from maybe a year ago. They haven’t updated it.
Now, let’s jump back to the other one. This only talks about their 21 miles of high pressure, large diameter gathering lines. They have a lot more than that now. Their big project they started first was the EXPRESS 30 pipeline or 30 EXPRESS. That’s about 60 miles of 30 inch transmission line to Brookshire. Now their next big transmission pipeline is from Washington County to Brazoria County to Sweeny. They call it the AMP NGL line.
But right now, and for those of you who are here on the AMP projects, they have a lot of small gathering line projects in those three counties I mentioned. Those pipelines have a lot of different names. Go ahead one more. So one of them could affect your property, and this is a little bit more detailed map of this, the Yellow Jacket – 12″ Gathering Line. That’s one of the more recent gathering line projects and then there’s a lot of other ones that you may have heard these names or you’ve got neighbors or friends that have been affected. And they’re different diameters but these are some of the names; Super Duty, Smackdown, the Burns. There’s one the Whiteners, the Winkelman. You see the names. And then they’ve got a lot of other ones. It’s just Segment One, Segment Two, Segment Three and they’re sometimes just a couple of miles to under 10 miles.
This is another picture of kind of their network of gathering lines in the area. It’s kind of right in that triangle between Brenham, Ellinger and then Burton-Round Top.
The Law of Condemnation in Texas
Next, let’s talk about the law of condemnation. These are questions I get a lot of. Well, isn’t it just the government that can condemn your land? Yes the State can, quasi-governmental agencies like we talked about, the LCRA can. But, yes private for-profit companies can condemn your land.
Why is that? The government has said it’s okay if the land will be used for a public purpose, a public use. Pipelines have been considered a public use. Pipelines are what are called common carriers, you all have all heard that.
In the State of Texas, what the Supreme Court has told us is if on the T-4 permit application the pipeline company checks the box that this is a gas utility or a common carrier line, the pipeline is considered to be for the public use or public good.
The Supreme Court has said that’s good enough for us. So the Court has really broadened and relaxed its definition of what’s a public use.
Steps in the Condemnation Process
All right, steps in condemnation. There’s a handout that we had at the table that I think is very useful. I send this out to clients. If you Google online you’ll probably find something like this, too. A lot of times landowners are uncertain or unsure about where we’re at in the process. The right of way agents don’t make it any easier on you. So I always like to explain the steps in the condemnation process.
You all have probably been contacted by someone out of the blue saying they’d like to survey your property. Can we go on your property? You’re not going to hear typically from an Enterprise person you know or an AMP employee. These companies do like most businesses do, they outsource these things. They hire contractors and subcontractors.
So these pipeline companies hire right of way acquisition companies. We call them the right of way agents. When I’m sending emails to clients, I end up always calling them just ROW agents or R-O-W, right of way agents. The pipeline companies hire these companies, and there are lots of different right of way agent companies. Percheron’s a big one. Summit Resources is for the M2E3 pipeline. Defined Land Management is a company that AMP uses. There’s U.S. Field Services and all of these different companies.
You know the oil companies, when they’re trying to get oil and gas leases have land men or land women. It’s the same situation. These are land men or land women that are trying to acquire easements instead of oil and gas lease signatures. So, you’ll get contacted by these right of way agents. They’ll sometimes be on the property already in the survey, groups will be on your property and then they’ll say, oh, sorry we thought we had permission. What’s the old saying? It’s better to ask for forgiveness than permission. They like to use that strategy a lot. The larger companies will normally wait and get permission before they enter your property.
What if you say, no, I don’t want you to enter my property? And yes, this has happened with the M2E3 pipeline. They were eager to get started and eager to survey property, and landowners weren’t eager to let them on their properties. So what happened? They started filing lawsuits against property owners asking the court to grant them a temporary injunction to get on the property to survey. Is that legal? The answer is yes. And on water lines, that’s actually in the water code. The Code grants a water utility the ability to enter your property, without even a court order or temporary injunction.
So for the M2E3 pipeline, you know, companies normally don’t resort to that. Normally they’ll continue to ask you and send you a letter and say we’re going to file some kind of temporary injunction. But the M2E3 pipeline did, especially here in Colorado County. And then they get access to survey.
At the same time there are these right of way agents trying to get you to agree on an easement. They have an easement in hand and they’re saying this is the easement. We’re going to get it no matter through eminent domain, so why don’t we just agree. About 80% of the landowners accept the first offer and agree to that form pipeline easement. So that’s 80% and that’s a huge number. I’m glad to see you all here because you’re not a part of the 80%.
If no easement agreement is reached, the landowner’s going to get some initial notices and some final notices of condemnation. We’ll talk about that. They’ll get the Landowners Bill of Rights. That’s part of what the law says you’re supposed to receive.
Then the pipeline company will file a condemnation suit. I do normal civil litigation also. The condemnation process is different. There’s what’s called an administrative process or special proceeding process first. And that’s the in-between, you want to look on your steps in between steps four and, you know, steps 11, 12. So that’s the special proceeding process or administrative process.
The pipeline company files the condemnation suit. Of course, the landowner has to be served with it formally just like any other lawsuit. Then the court will appoint special commissioners. Three landowners from the county to serve as special commissioners.
A lot of times folks get that confused and say, well I know the county commissioners real well and I think they’ll be good at evaluating the property. Well, it’s not the county commissioners, its special commissioners that the judge appoints.
One thing to note, when the special commissioners are appointed, the judge will appoint three special commissioners and then sometimes two alternates. Why, because each side has the right to strike one of the special commissioners. So what I like to do is we like to send out the list of the special commissioners and alternates right away to the landowners to say, hey, do you know some of these people? If you do, what do you know about them? We do a background search on them and just see what their background is.
Most of the time the court will have a short list of people that they appoint as special commissioners. Normally, and hopefully, they’re folks who have some background in rural land. They’re ranchers, farmers or you know real estate appraisers or realtors that sell rural land, that’s what we’re dealing with here, typically.
But I’ve also seen special commissioners that had no affiliation, no knowledge or background in land, and they were affiliated with one of the political parties and that’s how they got appointed. And that’s unfortunate because they’re likely to be folks who aren’t familiar with the issues we’re dealing with.
The special commissioner’s job is to award just compensation or award you compensation for what the pipeline company is taking from you — an easement all over your land and also the damage to your land. That’s what the special commissioner’s job is. It’s not to revise the easement terms, renegotiate easement terms for you, say what easement terms are good or bad or what should or shouldn’t be in there. They don’t have anything to do with easement terms.
The easement terms that are dealt with are the easement terms that are in the condemnation suit. So, if you look at the body of the condemnation suit, it’s going to say what the M2E3 pipeline company or AMP pipeline company wants. We want a 50 foot easement, we want a temporary workspace, we want all these things. And we want the ability to do this and that on the above the surface, we want access to your property, all those things, those are terms that essentially will be in the easement or are in their proposed easement agreement. So their proposed easement agreement and their petition typically match.
The special commissioners hearing typically lasts about an hour to an hour and a half. Each side gets to put on evidence of what they believe just compensation should be. Then the special commissioners issue an award. Typically, it’s right then and there, they issue an award. Then either side can object to the award.
So, if the landowner has great award and is extremely happy, you know, enjoy that because it’s short lived. The pipeline company’s probably going to object to the award. Sometimes strange things happen and the special commissioners go with the pipeline company, or goes below what the pipeline company offered for the easement. Then you the landowner can object to the award. So either side can object to the award.
So whatever happens at the special commissioners’ hearing is not the end of the world. I’ve try to remind clients of that. After that it’s step 12, right, on our steps. Then normal civil litigation begins. It’s almost like this whole special process was for nothing? Essentially, yes, it’s a moot point.
So now you start the normal civil litigation. A judge or jury is not allowed to see what the special commissioners awarded. That evidence is not admissible, typically, to show the judge or jury what the special commissioners did. So it’s a de novo trial — it’s starting anew.
So the landowner gets an initial offer. Let’s just make up a number. It’s $10,000 initial offer. And then, as our sheet says, there’s a certain amount of time that has to pass before the pipeline company can send you the final offer. The final offer needs to be accompanied with an appraisal. It’s an appraisal by a pipeline-hired third-party appraiser. That appraiser is going to come up with an appraisal that I almost guarantee is not going to be $10,000, it’s going to be less. It’s going to be $3,000. And that’s the final offer, and I’m just speaking about what generally happens. Every once in awhile there are different situations.
But generally the pipeline company’s going to send a final offer that’s going to say, your final offer’s $10,000. But, attached is the appraisal by our appraiser that says we really only need to pay you or have to pay you $3,000. So the landowner receives this final offer of $10,000, but we only really have to pay you $3,000, so watch out because that may be all you get, okay.
I don’t want to say it’s a tactic or strategy — it’s just what they do. They want to say that we’re offering you more than what an appraiser says just compensation is. I believe if you get another appraiser, you will probably see something different. Experts vary in their opinions. But I’ll talk a little bit more about how they come up with their number.
Once the special commissioners issue an award and they deposit the award, then the judge actually acknowledges the deposit of the award money from the pipeline company and then the pipeline company can begin work. So just because one side objects to the award doesn’t put a hold on that project. However, before the special commissioners issue their award, they’re not to begin construction.
Now, there are some special circumstances where I think a pipeline company or you know a condemner can ask for special relief or special order from the court to begin construction. But that would be in some emergency circumstance — these pipelines are not emergency circumstances.
A condemnation case can be filed in district court or county court at law. I’ll look and see if Lee County has a county court at law, but I don’t think it does. So, it would be in the district court there. The county court at law and the district court have concurrent jurisdiction, which means the case can be filed in either one. That judge is the one that appoints the special commissioners.
Right of Way Agents & Law Firms
So for the M2E3 pipeline, we mentioned Summit Resources. As far as I know there are two firms handling it. Winstead has from, I believe, Lee County down and then Zabel Freeman has from Burnet County to Midland. There may be another firm somewhere in between but I think it’s only those two firms. I’ve dealt with both of them a lot. Zabel Freeman does condemner work.
For the AMP pipeline, Defined Land Management is a right of way agent or right of way acquisition company out of San Antonio. They have lots of right of way agents that I’ve dealt with and there’s lots of ones that I haven’t and I’m still learning new names.
Just like any company, you’ve got the lower level land agent and then his boss and then his boss. And so there’s different tiers of management. Ross Molina Oliveros is a law firm out of San Antonio. They do condemnation work almost exclusively like Zabel Freeman, and they’re on the AMP project.
The Texas Farm Bureau has a lot of these videos. They were really supporting the eminent domain reform law. They had a lot of videos out there about what landowners think about right of way agents and their tactics. So it’s just basically about lowball offers and misrepresenting and things like that.
Texas Farm Bureau Video
– I’ve been contacted by a pipeline company.
– They tried to be real nice to me at first. They did everything they could to cozy up to me and be real friendly.
– The land man comes and speaks to you. We’re offering you this and all your neighbors have already done it. You’re the last hold out.
– They gave me an unbelievably, extremely low offer.
– A lowball offer.
– A very lowball offer.
– They try not to give you very good deals at all.
– A lot of people get shortchanged.
– Their negotiating tactics were not always full of integrity.
– And if you don’t agree to those terms, almost immediately, then somehow or another you’re taken to court. And you weren’t doing anything wrong. You were just minding your own business.
– They don’t care and they try to push you and they’re the rudest people.
– Strong-arm tactics.
– They certainly do their best to take advantage of people.
– Try to intimidate you.
– It’s not to beat up on the right of way agents. There are some of them who are very helpful and they provide me information and they communicate up the chain of command and all that kind of good stuff. So, you can move to the next one. But there are some that irritate me to no end. I just want you all to know that if you got a right of way agent that just seems overbearing and high pressure, that’s one of the tactics, don’t fall for it. Obviously, there are other people in the same boat.
I put this on here after I heard a client tell me this particular right of way agent said he would change the easement agreement, but then he said he did, but he didn’t or he put it in a different place in the easement agreement, I lost trust in him.
I’m in an adversarial profession. The opposing side is not my friend and I’m against them and they’re against me. So for me to hear a landowner say I was trusting the right of way agent to do what was best for me, I just said please make no mistake, he doesn’t represent you. That right of way agent doesn’t represent you. They will absolutely be friendly and nice to you. Great, and I want to be professional and cordial to anybody I deal with, too. But at the end of the day, I am not representing the pipeline company. That’s not my client.
My job is to represent my client zealously within the bounds of the law. That’s what I’m supposed to do. And the right of way agents have a somewhat similar duty, and it’s to represent their client, the pipeline company. Their duty is to get you to sign an easement agreement obtained quickly and cheaply. As cheaply as possible — that’s their job.
They’re not worried about you and your land for 10, 15, 20, 50 years. I guess I’m surprised when landowners are surprised by that. So I really want to say, remember they don’t represent you. They will misrepresent things — unintentionally or intentionally. I don’t know. But they’ll say things and then they’ll backtrack sometimes. Maybe they thought they would have authority and then all of a sudden they run it up the chain of command and then the pipeline company says, sorry you oversold. We can’t do that or we can’t do this. At the end of the day, once again, it creates a false expectation for the landowner and that’s a problem.
I associate right of way agents with realtors. I like realtors but they always want to get the deal closed yesterday. The right of way agents also want to get the deal signed quickly. It’s got to be signed by the end of the week. They want to create this sense of urgency because that will get you to sign.
I have so many clients that want to hire a lawyer just so they don’t have to deal with the high pressure tactics and the constant phone calls. So it does sometimes backfire on the right of way agents. I always say don’t rush to sign and just be careful.
This is something I saw in Pipeline & Gas Journal. This is an article talking about back in the old days, we used to do the over-the-fence valuation method. Which basically said well your neighbor took this, so you need to take that much. This is on rights of way and acquiring pipelines, pipeline easements. And then it says, if things got sticky or time consuming in negotiating with the landowner in question the agent could always play a condemnation card and threaten to invoke an eminent domain seizure. In other words, if we don’t get this deal settled or we don’t agree, then we’ll have to take you to court or we’ll file condemnation. That’s just their form of high pressure tactics.
Negotiating Pipeline Easements
These are some do’s and don’ts in negotiating. I guess the first thing is please consult with an attorney so that you’re not doing this on your own. But if you want to attempt to do this in the beginning, no problem.
Do reject the first offer and the proposed easement agreement. You know that proposed easement agreement for the pipeline company is a pipeline friendly easement agreement.
Don’t provide information to the right of way agent. They love to ask you to send them the information on your property. Do you have any appraisals? Do you have surveys? Do you have deeds? You know, you’re not obligated or required to provide them any information. Now, further on in the process, in the litigation process yes, you could be required to provide them information. But early on when the right of way agents first contact you, you’re not required to fill out their questionnaire or anything like that.
Don’t agree on a monetary number first. Folks, always like to do this, right. Well they offered me and I’m just going to pick a number, they offered me $30 a foot and I told them if I could get at least $50, stop. You’ve already undermined your position. How and why? Because have you nailed down the easement terms yet? No, so you don’t even know, well, worst case scenario is the easement terms are going to be the pipeline easement terms and you’ve already tried to negotiate a monetary term or monetary amount off that. So get the non-monetary easement terms nailed down first and then work on the monetary. Don’t rush to sign. Once again, be patient, be patient.
Key Terms of the Pipeline Easement Agreement
Key terms of the easement agreement. There’s a really good article put out by the AG Texas Extension Service, AgriLife. by Tiffany Dowell Lashmet. It’s a really good checklist. I know Tiffany and she’s done a really good job on it. These are some highlights just in general.
I’ve seen landowners agree to a pipeline easement before survey crews were even out on the property. How is that possible? They don’t even know where the pipeline’s going yet and they already agreed. That would be a situation where they’ve essentially given the pipeline company a blanket easement.
You know you used to see these old, old pipeline easements from the 1940s and 1950s or some from the 1930s that just say you know, a 30 foot wide pipeline easement over the 1,000 acres or something like that. Well, that’s a blanket easement and they could run who knows where. So we absolutely want a specific, legally defined easement. Sometimes that easement is described in metes and bounds, the boundary or it’s the center line, right. The center line’s described 25 foot on each side.
We want it to be a nonexclusive easement because what I’ve always pushed for and that doesn’t always stay in the easement agreement. Phillips 66 you’re going to get a 50 foot wide easement. We’d like the ability, if it doesn’t interfere with your pipeline, in the future if somebody else comes along, Epic or Enterprise and they want to put a pipeline parallel to that easement. Let’s see, if it’s nonexclusive maybe we can have their pipeline within that 50 foot easement as well. If not, what’s going to happen? A 50 foot easement, another 50 foot easement, another 50, next thing you know, you’ve got 150 feet taken up on your property.
So pipeline companies will oftentimes include other lines within that easement. But this is where we limit the pipeline to one pipe. Because what we don’t want and this happens often, is a pipeline company will say we’re getting a permanent pipeline easement and they won’t list how many pipelines they can put in the easement. Or they’ll say up to two or three pipelines within the easement. Well no, we want to limit it to one. So if they want to come back, the same pipeline company, and put another pipeline in, we need to be compensated for that also. Because one pipeline is going to damage your property to a certain degree, and two pipelines obviously will damage it more.
We absolutely need to define the width of the easement. That’s normally a given.
We want to limit the types of products in the line. That’s something that’s hard to get the pipeline company to agree to because they want the ability to run many types of petroleum products in the line. Kinder Morgan and PHP have agreed to just limit their easements to natural gas. So it is possible. It’s something we push for.
Limit the pipeline diameter. A lot of times they don’t want to do that because they want the ability to say it’s going to be a 20 inch line and then, if it’s not limited in the agreement, change their mind and install a 36 inch pipeline. Well, that’s very different from a 20 inch pipeline.
Specify the depth requirement. They normally always start at 36 inches and we want it deeper. How much deeper can it go? I typically see pipeline companies agreeing to 48, fairly easily. 60 sometimes depending on type of use of the property. I’ve had some clients with land that was going to be used for a railroad facility, a rail line and so a rail yard. So the pipeline was deeper, a lot deeper.
Other Key Terms in the Easement Agreement
There are other key terms. Surface facilities should be defined. This is something I’ve really been a stickler about is defining the surface facilities. Look at those easement agreements that are proposed by the pipeline companies and they allow above-ground facilities. And that term is very, very broad.
It could be a valve site, a compression station, you name it, it’s very, very broad. Often the right of way agent will tell you that once it’s in the ground you won’t even notice it. Or it’ll be out of sight, out of mind and you won’t even know it’s there. We’ll just have a couple of markers by the fence line.
Okay, well then what about all these surface facilities that you’re saying you can have above ground? You’re going to notice those. And those are going to be an issue. They’re going to affect your land. So we want to address that. We want to reserve the surface use in the easement agreement and be very specific. I’m typically saying agricultural, residential and commercial use. I think that covers just about everything.
Specify double ditching. You hear a lot about that. That’s pretty standard. One of the key terms that you know the eminent domain reform bills were trying to push was the double ditching. That’s just segregating top soil.
Access roads to the pipeline easement area. This is huge and this is one that they like to include. The pipeline companies want the ability to ingress and egress over, not just the easement area, but the land adjacent to the easement area. That could significantly affect your use of the property and the resale value of your land. On smaller tracts that are next to the county road, farm to market road, highway, whatever, this typically is not an issue. Why, because they’re going to be able to access you know their work area, pipeline easement from the public road. But with tracts that are really far off the beaten path or a large tract that’s not near an access point, the pipeline company will need access roads. So, I like to get those defined.
If there’s already a gravel road on your property that leads or crosses the pipeline easement area then the pipeline company could make it the access road. Let’s specifically say that this existing road is the access road and not just anywhere on my property. If you don’t specify the locations of access roads, your agreement looks like a blanket easement.
For example, and I’ll talk about this ’cause the case is over, but LCRA wanted a blanket ingress and egress easement over all of my client’s property adjoining, contiguous, adjacent to a canal — anywhere and everywhere. So what that meant was if he’s got another tract that’s contiguous, they can enter there and drive to the canal, while my client is dove hunting. That was our example and the LCRA answer was we wouldn’t do that. But LCRA could do that, so anything that you can do, I’ve got to assume that you will do or someone will do.
Require restoration. The easement agreement should require the pipeline company to put the land back to the condition or better than it was. Be specific about roads and road repair and fencing.
If they don’t use the easement or the pipeline for two years, normally we try to say is that the easement would terminate.
I don’t like arbitration agreements because that means a private judge, right, an arbitrator’s going to decide any disputes. I’d rather use our court system. Maybe our court system is sometimes slow or gets a bad rap but I’d much rather have a judge and jury decide things than a private judge.
Any pipeline easement agreement is going to say landowner cannot build structures in the easement area. Well, does that include roads, not include roads? So we want the easement agreement to say we can build a road across the easement area. A lot of times pipeline companies say well that road’s got to be 90 degree. Because you don’t want a road parallel or over the pipeline because there could be some sinkage and damage. So but we try to loosen up that language and say roads can be at a 45 degree angle. You’ve got some flexibility on how to make that road if you want to develop it for subdivision.
Now, your question is if the pipeline company acquires a road access over your property to get to the pipeline easement do you still have use of that road or can you still use that road? And the answer is that’s a key component that needs to be in your easement agreement with them. That you know you still reserve the right to use the road. Just like you still have the right to use the permanent access or permanent easement area. You just can’t interfere with their pipeline.
The language in that kind of access road agreement would be you don’t have the right to interfere with their use of the road when they’re accessing the pipeline. But that’s not going to occur that much once it’s in. But you definitely need to reserve the right to use the road. Of course, try to include some maintenance provisions and also be as specific as they need to add, if it’s a gravel road, then you know restore it to the condition it was or add four inches or six inches of caliche or whatever.
I have looked and I’ve asked other lawyers in this area about what’s the distance or limitation on a pipeline from a house or a barn? I haven’t found it yet and other lawyers that I know practice in this area still haven’t found it either, I will hear things like it’s 214 feet or 360 feet, If you find it, please send it to me, and let me know. But I don’t see a distance requirement from a house.
If the pipeline route runs under someone’s house, they could acquire that easement. So what does that mean? The house gets removed. Now, how does that work? Well a person gets compensated. What does the law say? You get justly compensated. What does that mean? Well, that’s what we fight about. They tend to not want to have to compensate somebody for a house or a barn. They try to avoid improvements, but they can’t always do that.
How to Calculate Just Compensation
What does just compensation mean and what’s the calculation? The pipeline companies have an appraiser, and he comes up with a number so I guess that’s the — no-no, it’s not the number. It’s their number! Well what about the CAD or what about the market value? You know, what does the market value mean?
The CAD values the property, which is not the same as valuing an easement agreement or the effect of a pipeline easement. I get all these comments about different valuations. Someone might say I’ve gotten an appraisal done recently because I refinanced my house. I can just use that.
That doesn’t take into consideration these key components that we’re going to talk about. This is how the law says to come up with just compensation. What’s the value of the part taken — the easement area. So they can calculate it as so many feet by so many feet and it comes up to be 2 acres. What’s the value of an acre on your tract of land? Is it $5,000, 1$0,000, $15,000? They go get comps and they adjust the comps because no comp is going to be exactly like your land, right. It’s not going to be the exact same acres, the exact same topography all that stuff. So, they’re going to make some adjustments and they’re going to come up with subjectively, this is how much per acre land in your area is worth. As an example we’ll say $10,000 an acre.
That easement is taking up two acres. So that’s $20,000. So the part taken would be $20,000 more or less. I’m going to tell you why it’s not exactly because they’re not taking 100% of the land. It’s not like a highway taking a strip of land fee simple. They’re taking a permanent easement, but you’ve still got the right to use the land. So they’re really not taking 100% of it. They’re taking normally what’s calculated as 90%. So they’re taking 90% of the rights you have in that land. So that’s our two acres times $10,000 an acre, that’s $20,000 times 90%. And that is $18,000.
So part of your land taken in the permanent easement is $18,000. However there is damage to the remainder. Pipeline companies like to say there’s no other damage to the rest of the property. Pipeline’s in the ground. The other part of the property’s not affected. Well I believe the right question to ask is, if we’ve got a 20 acre tract no pipeline and a 20 acre tract with a pipeline are they exactly the same? No they are not, one’s burdened by a pipeline. Is it going to have a lower value? So that’s where this damage to the remainder comes in.
So if you’ve got a 20 acre tract times $10,000 an acre, it’s worth $200,000. Because of this pipeline how much does that value of that property go down? All right, it could be 5% lower, 10% lower, 15%. It depends on how the pipeline runs across the property.
I have a client who has a five acre tract of land that the pipeline company has said is worth $30,000 an acre. Why, because it’s on the highway, it’s commercial. Highest and best use is commercial. But what happened? The pipeline goes right through the middle. So to have someone put a commercial business right on the middle, they can’t do it anymore. So, it’s probably damaged 50%. Maybe you can use a little bit on each side, but you can’t use the middle.
So this damage to the remainder of the property is a key component and unfortunately pipeline companies almost always ignore damage to the remainder. So this is a big point of contention always.
So you know how much is taken. What’s the damage to the remainder? So that’s your total damages and then I always say there’s a cost to cure component of payment and loss of production component too. You know I’m not going to be able to produce this year’s corn or rice on those 10 acres allocated to the easement. It may just be two acres, but that little part that’s cutoff that we can’t get to because they’re constructing it, well I can’t use that either. So there’s some loss of production there.
The Cost to Cure Damages
Even though our easement agreement says you’re going to disc it, you’re going to level it and you’re going to make sure it’s level, in two or three years it’s going to sink. There’s going to be some sinkage. You’re going to have to go back, so you’re going to have to disc it and level it, you name it. So I try to build in some cost to cure as well.
So this is it — these damages for access roads and temporary easements. With temporary easements, that’s a small component. They’re only going to use that for up to two years maybe and so you should get paid something for that. But these access roads, if it’s a permanent access road that they’re getting, honestly, it’s the same calculation as this. So you have permanent easement calculation and just do another one for the road easement. It’s another easement. So that’s something that they like to add in without you knowing about it. But it is another easement.
Question — can the landowner get royalties? That’s a common question. I think it comes from somewhere on the Internet. You know someone saying this is what you should ask for or make sure you get this. I have never seen that. Have I had clients ask for that? Yes, and the answer’s no. They’re not going to compensate, they’re not going to agree to compensate you that way. It has been my experience. I’d love for it to happen. I’ve seen one situation with a big ranch, and it was like a 1950s little small pipeline. The pipeline was probably almost all in the big ranch, and they did get some annual royalties from the pipeline company. That was kind of the only one situation I’ve seen. But that was unique.
Attorney’s Fees and Expert Fees
All right, attorneys fees and expert fees. One of the interesting videos from Texas Farm Bureau was also about how attorneys are expensive, and this costs a lot for landowners. I want to talk about that because, unfortunately, if you go to court, the process is unfair. You don’t get to recover your attorney’s fees if you go to court. You ask for a certain amount and the judge or jury says, yes, you’re right, landowner you get what you want. Pipeline company you have to pay them what they want. You’re not going to get awarded your attorney’s fees.
The statute’s not set up that way. Also, no expert fees are recovered in court by the property owner. Twenty states allow some type of recovery, but not in Texas. Unfortunately it’s you know it’s not a balanced playing field. There was an eminent domain reform bill pushed this last legislative session and the main one did not pass.
I want to encourage folks to talk to a landowner condemnation lawyer. Please, please if it’s me, great. If it’s not me, that’s okay, too. Go talk to somebody who you feel comfortable with who will answer your questions. I want to give you some background on how lawyers typically bill for services representing landowners in condemnation cases.
Is it an hourly or contingency fee. Most landowner condemnation lawyers operate on a contingency fee. I operate on a contingency fee. The contingency fee is calculated on the amount received by the landowner above the initial offer. That’s what I do. That’s what most lawyers do. So if your initial offer is $20,000 that’s yours. That’s not counted or used to calculate the contingency fee.
If a settlement is reached for $50,000 that means $30,000 above the $20,000 original offer. With a 1/3 contingency, the lawyer would get $10,000 and you would get $20,000 plus $20,000, equals $40,000. Contingency fee arrangements can range anywhere from 1/3 to 45%. I’ve seen some that are 50%, it just depends.
What does it depend on? I don’t know, it depends on the lawyer, but also, sometimes there are landowners who say well I’m going to wait and I’m going to wait and I’m going to wait and I’m going to try to negotiate on my own. They try to negotiate on their own to get a deal so they don’t have to share any of the money with the lawyer. Okay, I understand that. A lot of times you’ll see in the end if a deal’s not reached they go to the special commissioners hearing, they go to the condemnation suit in court, and the landowner says, now I want to hire a lawyer. Well, a lot of times the lawyer’s going to say the rate’s no longer 1/3 it’s 40%, 50%.
Who pays the experts and case costs or case expenses? I put these as questions because these are questions you need to be asking your lawyer. I see some lawyers include mileage as case expenses — mileage you know when they’re going to visit your property. They may also include charges for mailing you things.
I try to keep my case expenses simple. So case expenses might include fees for experts, mediation costs if we go into regular litigation and then deposition costs if there are depositions required. I try to keep it simple and not nickel and dime the client. I just say ask this question of your lawyer. If you’re talking with me, ask me this question and let’s talk about it.
Recommended Steps for Landowners
So you as a landowner may be thinking “thanks for telling us all this, but tell me what I should do”.
- I always say you should document your land. It’s always good to have the “before” picture. You should take pictures showing what it looks like now, with trees and the fences in place. Show the kind of fences. Show the pasture and pens, if you’ve got pens. Are there water wells? Take a picture of the water well. Take pictures of other improvements. Gather records showing what these improvements cost to build.
- Save communications you receive from right of way agents and the pipeline company. All the pipeline right of way agent letters and correspondence and things that they’ve sent you can be a lot of paper. File them away. Don’t file them in the waste basket. Put them somewhere and save them. If it’s a shoebox, that’s fine. All the plats and schematics and things like that should also be saved. This information could be helpful in the future. Sometimes the pipelines don’t comply with notice requirements and we to retain evidence when they don’t. We always want to make sure they have noticed you properly and have they given us enough time to respond? Save notes of all the comments that the right of way agents and the pipeline reps make. Why? Because that gives us a little bit more insight about the project and what they’re doing.
- Jot down important issues and concerns and questions. It’s extremely important and I like to send out to clients kind of my own questionnaire. You know, tell me about the property. Tell me what concerns you. Well, I’m concerned because I don’t know where to move my cattle. I got a certain number of cattle and this is the only tract that I have. So I need to know when they’re going to start the construction and are they going to fence the trench? Or are they going to fence the easement area, the temporary easement area? Honestly, pipeline companies used to temporarily fence the easement area. Now, all of a sudden, I guess one pipeline company ran the numbers and said, ah, it’s too expensive to temporarily fence the trench. So we’re just going to leave it open and pay for a cow that’s lost, you know. But things like that I need to know. Perhaps I don’t just have commercial cattle. I’ve got registered cattle. I’ve got registered show cattle. I’ve got registered miniature cattle. I had a client like that — I mean these are special and they’re really expensive. And oh, by the way if they’re not going to fence the trench, I’m going to have to corral them up. You know I can’t let them be out because one cow or the bull is worth $20,000 or $30,000 value. So those are all things that I need to know. Perhaps the route’s going to run right through a well, a water well. Okay, well that’s something we need to know.
- Please talk to a landowner condemnation lawyer and know where you are in the process. This will relieve a lot of stress that you could have from right of way agents or just papers that you’re seeing in the mail. Know where you’re at. On the M2E3 pipeline, we’re right around here, steps five and six. Most of the suits in Colorado County have already been filed. They’re concerned about some protected species of toad, and they want to get construction done before the end of the year. So there’s some urgency there. They’re filing condemnation suits. When you get that condemnation lawsuit, you know does action need to be taken? You need to be talking to a lawyer. Why? Because maybe buried in that condemnation petition at the back there’s an order appointing special commissioners. You need to be having those conversations or you need to be thinking about do we want to strike one of these. Do we not want to strike these? If you want to strike one of them, who do we want to strike? Is it the end of the world if you strike somebody or not strike somebody? I’m going to say no, it’s not the end of the world. I’m going to say this, the panel of three almost always unanimously comes up with an award. But you could have a situation where one of them is in disagreement. As long as two of them agree on the award, that’s enough. But I always see them unanimously come up with an agreement or come up with an award. The AMP pipeline is across the board. So I don’t really want to speak to where AMP pipeline is on the process because it varies. They’ve got so many different projects. Normally they’re sending initial offers and then some final offers, but normally initial offers, so.
What Happened with Eminent Domain Reform
We had a question about eminent domain reform. This is what was proposed this past legislative session. There was a Senate bill and a House bill. Senator Lois Kolkhorst who covers most everybody’s district here probably and Representative DeWayne Burns had companion bills. The key parts were basic, favorable easement terms in statute. The bills provided easement terms that were going to be in every pipeline easement agreement. They were pretty standard, and they’re just about in all final pipeline easement agreements. So, I think the pipeline companies did not object to this part of the bills.
The other part that the pipeline companies had some consternation over was a public meeting requirement. It was argued that these pipelines are public utilities, exercising the right of eminent domain for a public purpose, In Texas the Public Utility Commission, the PUC, requires a public meeting and public notice about projects. The argument was that pipeline companies should do the same thing. That was something that pipeline companies were very nervous about. You can go back and look at news stories about the Keystone Pipeline protests. There’s also organized opposition to the Kinder Morgan Permian Highway Pipeline. There have been meetings where a lot of activists show up who aren’t the landowners. They show up and have something to say about the pipeline project. So pipeline companies wanted to put some restrictions on that the public meetings and say the meetings would only open to affected landowners or affected landowner’s lawyers or representatives. Something like that. So that was kind of a loosey-goosey term that was thrown around.
Then that was a part that the pipeline companies really didn’t like at the end — the initial lowball offer penalty. You heard the Texas Farm Bureau video about lowball offers. So the bills’ authors wanted to somehow create a penalty for lowball offers. It would have more or less have worked like this. If pipeline company’s final offer is $10,000 and you go to special commissioners’ hearing and the special commissioners award you know $20,000. If it’s a certain percentage over the final initial offer, so the landowner would bet awarded additional compensation. Essentially, the pipeline companies would get penalized, for giving you a lowball offer. That was something that got debated backwards and forwards.
As Ronnie mentioned here, Representative Craddick out of Midland is very pro-eminent domain. He had some issues with this legislation so he pushed for some revisions that really almost turned the bills into a different direction completely. He watered the bills down after the Joint Committee’s session so the bills didn’t get passed. The bills were pushed by Farm Bureau and the Texas and Southwestern Cattle Raisers and wildlife organizations and so. I attended one of these Joint Committee hearings and the legislators were working hard to get this passed. One of the questions was always asked is if we pass this bill this session, will landowner groups stop pushing eminent domain. They want to have a moratorium for 10 years or 15 years.
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